Medicare is one of the cornerstones of the American healthcare system, but it is quite complex and despite being well-known, it has so many intricacies that unless you study up you might not be able to understand the minutiae of how it works.
Everyone knows that there are different parts to Medicare and that some of the parts are subsidized by the government, but it is a lot more complicated than that, there is a fee structure and users can be liable for expenses if they do not have the right coverage, jus like with any other type of medical insurance.
Medicare is divided into four parts:
- Part A (Hospital Insurance): is free as it is linked to a US citizen’s work history, helps cover inpatient care in hospitals, skilled nursing facility care, hospice care, and home health care.
- Part B (Medical Insurance), which unlike Part A is not free and has premiums depending on the state you live in. This part helps cover:
- Services from doctors and other health care providers
- Outpatient care
- Home health care
- Durable medical equipment (like wheelchairs, walkers, hospital beds, and other equipment)
- Many preventive services (like screenings, shots or vaccines, and yearly “Wellness” visits)
- Medicare Advantage (also known as Part C) is a “Medicare-approved plan from a private company that offers an alternative to Original Medicare for your health and drug coverage.” These “bundled” plans include Part A, Part B, and usually Part D. It has some restrictions and often costs more than Part B, but it can include more coverage and can work closer to a traditional medical insurance
- In many cases, you can only use doctors who are in the plan’s network.
- Plans often have different out-of-pocket costs than Original Medicare or supplemental coverage like Medigap. You may also have an additional premium.
- Plans may offer some extra benefits that Original Medicare doesn’t.
- Part D (Drug coverage): helps cover the cost of prescription. It can be purchased separately with a Medicare Advantage Plan with drug coverage or with Parts A and B. Plans that offer Medicare drug coverage are run by private insurance companies that follow rules set by Medicare.
There are other parts of Medicare that depend on which state you live in, but these are the main parts that most Americans know and will interact with.
Even though these are federal programs and are subsidized by the government to help those who qualify, they can still be quite unaffordable, so there are many tips and tricks to avoid paying full price for Part B, which is the most affordable option between Part B and Medicare Advantage. Although premiums are roughly $1, not all beneficiaries pay the full amount. Medicare enrollees with limited income may be eligible for a state-administered Medicare Savings Plan (MSP) to help cover medical costs and this program can pay for Part B expenses, but eligibility is determined by individual state guidelines. Generally, income must fall within a range of $1,500 to $2,150 for the state to cover Part B premiums.
Another way to avoid paying full price is to have a spouse who worked in a government job as in this case there is no extra payments or copays, just the annual fee. It is important to remember that these fees as well as the facilities that are covered under the plan change every year and depend on the state you live in, and sometimes even the area you live in.
Fixating on the cheapest plan may not work in your favor, as it may be heavily restricted in your area and you may be unable to get medical coverage, so do your research and do not get swayed solely by numbers or you will end up paying more in the end.